nep-dev New Economics Papers
on Development
Issue of 2011‒09‒22
twenty papers chosen by
Mark Lee
Towson University

  1. Children of the Revolution: Fetal and Child Health amidst Violent Civil Conflict By Christine Valente
  2. Child Gender and Parental Borrowing: Evidence from India By Isabelle Agier; Isabelle Guérin; Ariane Szafarz
  3. No Country for Old Men: Aging Dictators and Economic Growth By Richard Jong-A-Pin; Jochen O. Mierau
  4. Formal Sector Price Discoveries: Results from a Developing Country By M. Ali Choudhary; Saima Naeem; Abdul Faheem; Nadim Haneef; Farooq Pasha
  5. Weapons, Violence and the Perpetrator-Victim Nexus in South Africa By Kai Thaler
  6. Do institutions and social cohesion enhance the effectiveness of aid? New Evidence from Africa By Mina Baliamoune-Lutz
  7. Sex and Credit: Is There a Gender Bias in Microfinance? By Beck, T.H.L.; Behr, P.; Madestam, A.
  8. Remittances in Pakistan - Why have they gone up, and why aren’t they coming down? By Udo Kock; Yan Sun
  9. External Sustainability of Oil-Producing Sub-Saharan African Countries By Misa Takebe; Robert C. York
  10. Burkina Faso - Policies to Protect the Poor from the Impact of Food and Energy Price Increases By Isabell Adenauer; Javier Arze del Granado
  11. Financial Deepening, Property Rights and Poverty: Evidence from Sub-Saharan Africa By Yifei Huang; Raju Jan Singh
  12. Improving educational quality through enhancing community participation : results from a randomized field experiment in Indonesia By Pradhan, Menno; Suryadarma, Daniel; Beatty, Amanda; Wong, Maisy; Alishjabana, Armida; Gaduh, Arya; Artha, Rima Prama
  13. Globalization and Gender Equality in Developing Countries By Niklas Potrafke; Heinrich Ursprung
  14. Is the Formal Sector too Large or too Small? A Reexamination of Minimum Wages in Developing Countries By Frédéric Gavrel, University of Caen Basse-Normandie, France - CREM-CNRS
  15. Marriage and Power: Age at first marriage and spousal age gap in Lesser Developed Countries By Sarah Carmichael
  16. India and the Civil War in Sri Lanka: On the Failures of Regional Conflict Management in South Asia By Sandra Destradi
  17. A Cluster-Based Industrial Development Policy for Low-Income Countries By Keijiro Otsuka; Tetsushi Sonobe
  18. An Inquiry into the Rapid Growth of the Garment Industry in Bangladesh By Khondoker Abdul Mottaleb; Tetsushi Sonobe
  19. Free riding and durable adoption: a test of color television consumption in rural China By Rong, Zhao
  20. The Africa-Dummy in Growth Regressions By Max Köhler; Stefan Sperlich; Julian Vortmeyer

  1. By: Christine Valente (Department of Economics, The University of Sheffield)
    Abstract: This paper considers the impact of exposure to civil conflict on health inputs and outcomes from conception to age five, using the recent Maoist insurgency in Nepal as a case study. Conflict intensity is measured by the number of conflict deaths by district and month and merged with pregnancy histories from the 2001 and 2006 Demographic and Health Surveys. Within-mother estimates show that civil conflict increases the likelihood of miscarriage, so that exposure to conflict in utero has not only a scarring effect but also a selection effect on survivors, most likely due to a combination of maternal stress and malnutrition.
    Keywords: civil conflict, child health, fetal loss, Nepal
    JEL: I10 J13 O15
    Date: 2011–09
  2. By: Isabelle Agier; Isabelle Guérin; Ariane Szafarz
    Abstract: The unequal treatment of children is not gender neutral from the parent side. Our results show that women try to compensate through debt for the unbalanced situation faced by their daughters compared to their sons. However, the lack of symmetry between mothers' and fathers' financial situations leads to the perpetuation of gender inequality through generations.
    Keywords: Gender; discrimination; borrowing,; debt; children; mother; father
    JEL: O16 D13 J12 O15 O17 G21 I32
    Date: 2011–09
  3. By: Richard Jong-A-Pin; Jochen O. Mierau
    Abstract: This paper develops a model of the relationship between the age of a dictator and economic growth. In the model a dictator must spread the resources of the economy over his reign but faces mortality and political risk. The model shows that if the time horizon of the dictator decreases, either due to an increase of mortality risk or political risk, the economic growth rate decreases. The model predictions are supported by empirical evidence based on a threeway fixed effects model including country, year and dictator fixed effects for a sample of dictators from 116 countries. These results are robust to sample selection, the tenure of dictators, the definition of dictatorship, and a broad set of economic growth determinants.
    Keywords: Aging, ,; economic growth; government performance; political instability; political leaders
    JEL: H11 O11 O43
    Date: 2011–09
  4. By: M. Ali Choudhary (University of Surrey and State Bank of Pakistan); Saima Naeem (State Bank of Pakistan); Abdul Faheem (State Bank of Pakistan); Nadim Haneef (State Bank of Pakistan); Farooq Pasha (State Bank of Pakistan)
    Abstract: We present results of 1189 structured interviews about price-setting behavior of firms in the manufacturing and services sector in Pakistan. Our discoveries are that frequency of price change is considerably high, lowering the real impact of monetary policy. The remaining price stickiness is explained by firms caring about relative prices and the persistence of shocks. The exchange-rate and cost shocks are more important than financial and demand shocks for both setting prices and also the readiness with which these pass-through to the economy. Firms with connections with the informal sector, especially through demand, have a lower probability of price adjustment.
    JEL: E32 E52 O11
    Date: 2011–09
  5. By: Kai Thaler
    Abstract: Given the high levels of crime and violence in South Africa, there may be a temptation for citizens to arm themselves for protection. Using quantitative survey data from the Cape Area Panel Study and qualitative interviews with residents of high-violence neighborhoods, this paper examines the question of who carries weapons outside the home in Cape Town and what the effects of weapon carrying may be. Multiple regression analysis is used to test the significance of possible drivers of weapon carrying and the results are discussed in the South African social context. Weapon carrying is found to be associated with both assault perpetration and victimization, suggesting that it is part of a violent lifestyle in which weapon carriers are likely to use their weapons both offensively and defensively. Possible weapon-related policies for violence reduction are also discussed.
    Date: 2011
  6. By: Mina Baliamoune-Lutz
    Abstract: Using the Arellano-Bond dynamic panel GMM estimator, this paper explores the effects of aid, institutions, and social cohesion on per-capita income growth in 34 African countries, focusing in particular on the interplay of aid and institutions and the interplay of aid and social cohesion. The empirical results indicate that social cohesion enhances the growth effects of aid but there is a threshold effect, suggesting that aid becomes effective in enhancing growth in countries with higher social cohesion. Surprisingly, the results show that beyond a certain level of improvements in institutional quality, institutions (political rights and civil liberties) reduce the effectiveness of aid. We discuss the implications of these results.
    Keywords: Growth; aid effectiveness; institutions; social cohesion; Africa
    JEL: F35 F43 O17
    Date: 2011–09
  7. By: Beck, T.H.L.; Behr, P.; Madestam, A. (Tilburg University, Center for Economic Research)
    Abstract: This paper examines the effects of group identity in the credit market. Exploiting the quasirandom assignment of first-time borrowers to loan officers of a large Albanian lender, we test for own-gender bias in the loan officer-borrower match. We find that borrowers pay on average 29 basis points higher interest rates when paired with a loan officer of the other sex. The results indicate the presence of a taste-based rather than a statistical bias, as borrowers’ likelihood of going into arrears is independent of loan officer gender. Ending up with an opposite-sex loan officer also affects demand for credit, with borrowers being 11.5 percent less likely to return for a second loan. The bias is more pronounced when the social distance, as proxied by difference in age between the loan officer and the borrower, increases and when financial market competition declines. This is consistent with theories that predict a tastebased bias to be stronger when the psychological costs of being biased are lower and the discretion in setting interest rates is higher. Taken together, the findings suggest that owngender preferences can have substantial welfare effects.
    Keywords: Identity;interest rates;gender;loan officers;microfinance.
    JEL: G21 G32 J16
    Date: 2011
  8. By: Udo Kock; Yan Sun
    Abstract: The flow of workers’ remittances to Pakistan has more than quadrupled in the last eight years and it shows no sign of slowing down, despite the economic downturn in the Gulf Cooperation Council (GCC) and other important host countries for Pakistani workers. This paper analyses the forces that have driven remittance flows to Pakistan in recent years. The main conclusions are: (i) the growth in the inflow of workers’ remittances to Pakistan is in large part due to an increase in worker migration; (ii) higher skill levels of migrating workers have helped to boost remittances; (iii) other imporant determinants of remittances to Pakistan are agriculture output and the relative yield on investments in the host and home countries.
    Keywords: Capital inflows , Cross country analysis , Economic models , Migration , Pakistan , Workers remittances ,
    Date: 2011–08–17
  9. By: Misa Takebe; Robert C. York
    Abstract: In the extensive empirical work carried out across the IMF on oil-producing sub-Saharan African (SSA) countries, the notion of "sustainability" is often directed toward fiscal policies, and, in particular, views on the "optimal" non-oil primary fiscal deficit. The bulk of this work does not, however, address external sustainability, which is a concern especially for those SSA oil producers operating under a fixed exchange rate regime. A couple of recent papers have extended the existing methodologies to assess external sustainability for some oil-producing countries but they do not focus on those in sub-Saharan Africa. In this paper, we bolster this empirical work by providing a range of estimates for the long-run external current external account balance for each of the SSA oil-producing countries, based on three widely used methodologies in the IMF. Our research strategy is to apply these models to the eight countries in the subregion - Angola, Cameroon, Chad, Côte d’Ivoire, Equatorial Guinea, Gabon, Nigeria, and the Republic of Congo - using similar simplifying assumptions so that we are using the same lens to view how they do and do not differ.
    Date: 2011–08–25
  10. By: Isabell Adenauer; Javier Arze del Granado
    Abstract: This paper assesses the effectiveness of policies taken by the Burkinabè authorities to protect the poor from the adverse impact of a combined food and oil price shock in 2008. Estimates of the impact based on household survey data and a price pass-through model suggest that these policies were not well-targeted, benefiting the wealthier groups of the population rather than the poor. More effective policy measures, such as a conditional cash transfer system, which is already being implemented on a pilot basis in urban areas, are discussed as an alternative policy option.
    Keywords: Agricultural prices , Burkina Faso , Energy prices , Fiscal policy , Price increases , Price stabilization , Social safety nets ,
    Date: 2011–08–19
  11. By: Yifei Huang; Raju Jan Singh
    Abstract: Recent studies on the relationship between financial development and poverty have been inconclusive. Some claim that, by allowing more entrepreneurs to obtain financing, financial development improves the allocation of capital, which has a particularly large impact on the poor. Others argue that it is primarily the rich and politically connected who benefit from improvements in the financial system. This paper looks at a sample of 37 countries in sub-Saharan Africa from 1992 through 2006. Its results suggest that financial deepening could narrow income inequality and reduce poverty, and that stronger property rights reinforce these effects. Interest rate and lending liberalization alone could, however, be detrimental to the poor if not accompanied by institutional reforms, in particular stronger property rights and wider access to creditor information.
    Keywords: Access to capital markets , Cross country analysis , Development , Household credit , Income distribution , Poverty reduction , Private sector , Sub-Saharan Africa ,
    Date: 2011–08–12
  12. By: Pradhan, Menno; Suryadarma, Daniel; Beatty, Amanda; Wong, Maisy; Alishjabana, Armida; Gaduh, Arya; Artha, Rima Prama
    Abstract: This study evaluates the effect of four randomized interventions aimed at strengthening school committees, and subsequently improving learning outcomes, in public primary schools in Indonesia. All study schools were randomly allocated to either a control group receiving no intervention, or to treatment groups receiving a grant plus one or a combination of three interventions: training for school committee members, a democratic election of school committee members, or facilitated collaboration between the school committee and the village council, also called linkage. Nearly two years after implementation, the study finds that measures to reinforce existing school committee structures, the grant and training interventions, demonstrate limited or no effects; while measures that foster outside ties between the school committee and other parties, linkage and election, lead to greater engagement by education stakeholders and in turn to learning. Test scores improve in Indonesian by 0.17 standard deviations for linkage and 0.22 standard deviations for linkage+election. The election intervention alone leads to changes in time household members accompany children studying per week, but this does not lead to learning. Linkage is the most cost effective intervention, causing a 0.13 change in standard deviation in Indonesian test scores for each 100 dollars (US) spent.
    Keywords: Education For All,Tertiary Education,Primary Education,Teaching and Learning,Disability
    Date: 2011–09–01
  13. By: Niklas Potrafke (Department of Economics, University of Konstanz, Germany); Heinrich Ursprung (Department of Economics, University of Konstanz, Germany)
    Abstract: This study empirically assesses the influence of globalization on the institutional root causes of gender equality as measured by the new OECD Social Institutions and Gender Index (SIGI). We capture the multifaceted concept of globalization with the KOF index and its three sub-indices which measure the economic, social and political dimensions of globalization. Observing the progress of globalization for a sample of almost one hundred countries at ten year intervals starting in 1970, we find that economic and social globalization exerted a decidedly positive influence on the social institutions which underlie gender equality.
    Keywords: globalization, gender equality, social institutions
    JEL: O11 O57
    Date: 2011–09–12
  14. By: Frédéric Gavrel, University of Caen Basse-Normandie, France - CREM-CNRS
    Abstract: This paper reexamines the issue of the division of the labor force between the two sub-markets (formal and informal) of a developing economy. The formal sector is represented by a matching model with vertically differentiated workers. Assuming that firms hire their best applicants, we state that the formal sector is too small in terms of its labor force but too large in terms of job creation. Next we show that introducing a minimum wage increases the size of the formal sector with respect both to its labor force and to job creation. In accordance with the well-known paradox of Harris and Todaro, the enlargement of the formal market is accompanied by a rise in unemployment. However, when associated with a tax on job creation, the introduction of a minimum wage in the formal sector improves the efficiency of the labor market by making the formal sector more attractive to workers.
    Keywords: Formal and informal labor markets, applicant ranking, efficiency, minimum wage
    JEL: O17 J64 J68
    Date: 2011–07
  15. By: Sarah Carmichael
    Abstract: This paper examines age at first marriage for women and spousal age gap as an indicator for female agency from 1950 until 2005. Using a dataset of 77 LDCs this paper seeks to explore which variables determine differences at a country level in marriage patterns. We look at the influence of urbanisation, education, percentage population of Muslim faith, and family type. We find that education is key in determining at what age women marry, having as would be expected a positive effect on age at first marriage and depressing spousal age gap. Urbanisation is significant, with a positive effect on age and negative on spousal age gap, although the effect is not very large. The percentage Muslim variable depresses female age at first marriage and increases spousal age gap but only when family type is not controlled for. The initially strong negative effect of percentage population Muslim over the period under consideration on age of first marriage has decreased, which raises some interesting questions about the role of Islam in female empowerment.
    Keywords: Marriage patterns, female agency, age at first marriage, spousal age gap
    Date: 2011–09
  16. By: Sandra Destradi (GIGA Institute of Asian Studies)
    Abstract: The paper provides an assessment of India’s role in the final years of the civil war in Sri Lanka (2003-2009). In particular, it looks for explanations for India’s inability to act as a conflict manager in its own region, which is in contrast to predominant assumptions about the role of powerful regional states. It also seeks to explain the surprising turn in India’s approach to the conflict, when in 2007 New Delhi began to rather explicitly support the Sri Lankan government— in disregard of its traditional preference for a peaceful solution and its sensitivity for the fate of Sri Lankan Tamils. While historical and domestic pressures led to India’s indecisive approach during the years 2003-2007, starting from 2007 regional and international factors— most notably the skillful diplomacy of the Sri Lankan government and the growing Chinese presence there—induced New Delhi to support the government side in order to keep some leverage on Sri Lankan affairs. The analysis of the Sri Lankan case opens several avenues for further research in the fields of regional conflict management and foreign policy analysis.
    Keywords: India, Sri Lanka, conflict management, civil war
    Date: 2010–12
  17. By: Keijiro Otsuka (National Graduate Institute for Policy Studies); Tetsushi Sonobe (National Graduate Institute for Policy Studies)
    Abstract: The need to construct an effective strategy for industrial development in low-income countries has been largely ignored by development economists because industrial policies have failed in many developing countries. This does not imply, however, that industrial development cannot be promoted. This paper attempts to synthesize the conventional wisdom in development economics with recent advancements in various fields of economics (such as theories of endogenous growth and agglomeration economies) to provide a useful framework to design a strategy for industrial development, which consists of investments in managerial human capital followed by the provision of credit and the construction of industrial zones.
    Keywords: Competitive market environments, comparative advantage, industrial cluster, managerial training, provision of credit, construction of industrial zones
    Date: 2011–09
  18. By: Khondoker Abdul Mottaleb (Civil Service College); Tetsushi Sonobe (National Graduate Institute for Policy Studies)
    Abstract: The export-oriented garment industry in Bangladesh has grown rapidly for the last three decades and now ranks among the largest garment exporters in the world. While its early success is attributed to the initial technology transfer from South Korea, such a one-time infusion of knowledge alone is insufficient to explain the sustained growth for three decades. This paper uses primary data collected from knitwear manufacturers and garment traders to explore the process of the continuous learning of advanced skills and know-how. It finds, among other things, that the high profitability of garment manufacturing due to the initial infusion of specific human capital attracted a number of highly educated entrepreneurs to the industry, that the division of labor between manufacturers and traders has facilitated the expansion of the industry, and that enterprise growth has lasted long because of the continuous learning from abroad by the highly educated entrepreneurs.
    Date: 2011–09
  19. By: Rong, Zhao
    Abstract: Using the consumption of color television sets in rural China, this paper documents the existence of a type of network effect – free riding across neighbors, which reduces the propensity of non-owners to purchase. I construct a model of timing the purchase of a durable good in the presence of free riding, and test its key implications using household survey data in rural China.
    Keywords: Durables; Free Riding; Network Effects; Rural China
    JEL: D12 L68
    Date: 2011–08–15
  20. By: Max Köhler (Georg-August-University Göttingen); Stefan Sperlich (Université de Genéve); Julian Vortmeyer (Georg-August-University Göttingen)
    Abstract: The Africa-Dummy has been identfied and different explanations for its appearance have been published. In this paper, the issue of the empirical identifcation of the Africa-Dummy is addressed. We introduce a fixed effects regression model to identify the Africa-Dummy in one regression step so that its correlations to other coeffcients can be estimated. A semiparametric extension of this model checks whether the Africa-Dummy is a result of misspecification of the functional structure. Furthermore, we show that sub-Saharan African countries have a positive return to the population growth and when adding interaction effects, the Africa-Dummy is even positive. Moreover, we show that the Africa-Dummy changes dramatically over time and the punishment for sub-Saharan African countries decreases incrementally since the mid-nineties. According to the Augmented Solow Growth model, it was even insignificant since the end-nineties.
    Date: 2011–09–06

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